Correlation Between LTO and XCAD Network

Can any of the company-specific risk be diversified away by investing in both LTO and XCAD Network at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining LTO and XCAD Network into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LTO and XCAD Network, you can compare the effects of market volatilities on LTO and XCAD Network and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in LTO with a short position of XCAD Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of LTO and XCAD Network.

Diversification Opportunities for LTO and XCAD Network

-0.23

Correlation Coefficient

LTO  XCAD Network

Very good diversification

The 3 months correlation between LTO and XCAD is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding LTO and XCAD Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCAD Network and LTO is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on LTO are associated (or correlated) with XCAD Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCAD Network has no effect on the direction of LTO i.e., LTO and XCAD Network go up and down completely randomly.

Pair Corralation between LTO and XCAD Network

Assuming the 90 days trading horizon LTO is expected to generate 1.2 times more return on investment than XCAD Network. However, LTO is 1.2 times more volatile than XCAD Network. It trades about 0.16 of its potential returns per unit of risk. XCAD Network is currently generating about -0.11 per unit of risk. If you would invest  11.00  in LTO on January 30, 2024 and sell it today you would earn a total of  8.00  from holding LTO or generate 72.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LTO  vs.  XCAD Network

LTO

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LTO are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, LTO exhibited solid returns over the last few months and may actually be approaching a breakup point.

XCAD Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XCAD Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for XCAD Network shareholders.

Pair Trading with LTO and XCAD Network

The main advantage of trading using opposite LTO and XCAD Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LTO position performs unexpectedly, XCAD Network can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in XCAD Network will offset losses from the drop in XCAD Network's long position.

The idea behind LTO and XCAD Network pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.